Big Gulp

The NAACP’s opposition to New York City Mayor Michael Bloomberg’s proposed ban on extra large sugary soft drinks recently received nationwide attention. On MSNBC’s “Up with Chris Hayes,” NAACP President Ben Jealous acknowledged that the NAACP was opposed to New York City’s ban on serving sugary drinks in containers of 16 ounces or more. Jealous called the ban “ill-conceived from the beginning and ill-executed.” He suggested that one of the reasons the NAACP opposed the ban is that it would nix the oversized sugar-laden drinks at “the mom and pop shops, [but] it wouldn’t have stopped it at 7-Eleven.” Is the NAACP concerned about the 7-Eleven “Big Gulp” gaining a competitive advantage over beverages at local neighborhood stores, or is something else going on?

Did Opponents “Sell Their Soul” to “Big Soda?”

In January, the New York Times reported that the NAACP and the Hispanic Federation jointly filed an amicus (friend of the court) brief supporting the litigation against Bloomberg’s ban. The law firm of King and Spalding, which the Times identified as Coke’s “longtime Atlanta law firm”, wrote the brief. The Times article mentioned that Coca-Cola has given significant support to the NAACP over the years and that the Hispanic Federation’s former executive director, Lillian Rodriguez Lopez, “recently took a job at Coca-Cola.”

Asked about its amicus brief, the New York City office of the NAACP referred questions to the American Beverage Association (ABA), the beverage industry’s main lobbying group. The ABA’s board includes representatives of Coca-Cola, Dr. Pepper Snapple Group, PepsiCo, and Red Bull. In fact, of the 28 officers and board members of the ABA who aren’t employees of the association itself, seven are with Coca-Cola or firms with Coca-Cola in their names, four are with PepsiCo, two are with Dr. Pepper Snapple, and one is with a firm tied to both Coca-Cola and Dr. Pepper.

New York City Mayor Michael Bloomberg declared the NAACP’s opposition to the big drinks an “outright disgrace” and charged the Hispanic Federation, which also opposes the ban, with having “sold its soul.” According to MSNBC, Jealous said that it wouldn’t have come to this “if only Bloomberg had sought the NAACP’s input from the beginning.”

Writing for the Huffington Post, Nancy Huehnergarth contends that “Big Soda” co-opted the NAACP and the Hispanic Federation through philanthropic grants, through grants from Coca-Cola and PepsiCo, and through sponsorships of NAACP conferences and programs. Huehnergarth implies that the NAACP had more of a relationship with Coca-Cola than simply agreeing with the beverage maker’s stand on the New York City ban.

The Coca-Cola Foundation has made some grants to the NAACP and its chapters in 2010 and 2011 ($66,000 to the LIFTED program, $200,000 to the Project HELP program). These grants are small in comparison to others made by Coke’s foundation. They would not seem to amount to enough to constitute a temptation for the NAACP to “sell out.” Huehnergarth also cites numerous Coke and Pepsi program sponsorships and encomiums for the NAACP as further evidence of the close relationship between the NAACP and the sugar-drink manufacturers. Remember, corporations do not have to disclose the specific contributions they make outside of their corporate foundations, such as the program sponsorships and other financial contributions they might make to a nonprofit, which could add up to significant sums.

Let’s be clear about corporate philanthropy, however. Many big companies view paying for program sponsorships, tables, and banners for a variety of groups representing racial or ethnic constituencies as akin to a marketing cost. The money that PepsiCo, Coca-Cola, and others give to these organizations is, for the firms, little more than a rounding error on their marketing budgets. Is it enough to buy the organizations? Unless the NAACP under Ben Jealous is for sale—and that’s not our impression of Ben Jealous at all—it’s hard to imagine. We don’t really buy the argument that this support would buy the NAACP’s soul. However, looking at the amicus brief, we also don’t totally buy the NAACP’s argument.

Was the Big Soda Ban Both “Over-Inclusive” and “Under-Inclusive?”

The amicus brief is correct that Mayor Bloomberg’s ban on sugar drinks covers the vague category of “food service establishments” but exempts convenience stores like 7-Elevens and large chain grocery stores. It also exempts drinks with more than 50 percent milk or milk substitutes, such as milkshakes. These exemptions are troubling and merit correction.

The amicus brief lambastes the ban as both “over-inclusive” and “under-inclusive.” The brief argues that it is “over-inclusive” because banning self-service cups larger than 16 ounces means that customer couldn’t fill large cups with non-sugary diet drinks, unsweetened tea, or water. The “under-inclusive” charge stems from the exemptions mentioned above. However, the brief drifts into a broader challenge of the ban as harmful for small businesses and disproportionately affecting freedom of choice in minority neighborhoods. The brief considers the latter an “unprecedented governmental interference with personal choice and freedom.”

Curiously, the amicus extends its argument to suggest that the ban is insufficient for addressing the problem of obesity: “Both organizations believe that…the City should address the issue of obesity in a comprehensive way in the legislative arena. In particular, both organizations believe that any serious effort to address the crisis of obesity must feature increased funding for and improvements to health and physical education programs in schools.” It cites Hazel Dukes from the NAACP New York Conference “lament[ing]” the “ban on beverage sales, as opposed to increasing funding for health education to combat obesity.” It further cites the Hispanic Federation’s Jose Calderon rapping the City for insufficient health and physical education programs in the schools: “The decision to ignore the need for increased public school physical education and health programs, in favor of a Ban of large soda drinks in certain establishments, Mr. Calderon urged, fails to provide a comprehensive solution to address the obesity epidemic in our country.”

This is where the amicus brief argument falls flat. As the brief notes, obesity is a huge problem nationally and in the black community. More than one-third of Americans are obese, and non-Hispanic black Americans have the highest rate of obesity at 49.5 percent. The issue isn’t just obesity. The direct link between sugar and Type 2 diabetes is also a problem, independent of obesity or body mass. While only 10.2 percent of non-Hispanic whites age 20 or over have diabetes, 18.7 percent of non-Hispanic blacks have the disease. There is also increasing evidence that sugar is addictive—not “sweet tooth” addictive, but heroin-like addictive.

The Bloomberg law’s exemptions are silly and unproductive. The NAACP is right on that score.  It is also right in challenging the disproportionate negative effects of the exemptions on minority businesses. While a reduction in sizes of soft drinks won’t kill small business, contrary to the arguments of some, the way the law is written has a disproportionately negative affect on small businesses that may be minority-owned or that may be located in neighborhoods with large minority populations. It is core to the mission of the NAACP to challenge laws that, even without intention, lead to disproportionately negative impacts on minority constituencies. In that vein, one can see where the NAACP’s challenge could be coming from.

Do Problems with Ban Mean We Should Do Nothing to Improve Public Health?

On the other hand, calling for no action at all because the law has exemption problems and doesn’t solve the entire problem, or because more education on obesity would be better, is also shortsighted. Such arguments are reminiscent of the tobacco industry fighting off early regulatory restraints. Do you remember how many stages the nation went through in coming to grips with tobacco?  We went through warning labels, age restrictions, bans on tobacco use in public places, removing ads from television, prohibition against free giveaways, elimination of cigarettes from vending machines, etc. Rather than waiting until there was a foolproof, all-encompassing law on tobacco, the nation added layer upon layer of regulations to control killer tobacco. If we follow the argument of Hazel Dukes and Jose Calderon to wait for completely comprehensive solutions, we will be stuck and the sugar addiction problem will continue largely unabated.

The U.S. Food and Drug Administration wasn’t even involved in the tobacco issue until the mid-1990s, thanks in part to powerful lobbying on the part of tobacco interests. Like the tobacco industry, the sugary beverage industry also has some pretty high-powered lobbyists in its corner. As reported by the Center for Responsive Politics, we point you to these lobbying expenditures:

Client 2012 2011 2010 2009 2008 2007
American Beverage Assn. $1,080,000 $950,000 $9,910,000 $18,850,000 $667,590 $684,616
PepsiCo $2,789,969 $3,260,000 $6,874,800 $9,453,000 $1,176,000 $1,000,636
Coca-Cola $5,180,020 $5,890,000 $5,880,000 $9,390,000 $2,540,000 $1,740,000

Coca-Cola is clearly powerful and influential. Its corporate board members include billionaire philanthropist Howard Buffett, former Secretary of Labor Alexis Herman, former Georgia Sen. Sam Nunn, and former baseball commissioner Peter Ueberroth. PepsiCo is smaller, but also influential, with nonprofit and foundation leaders on its board, including Alberto Ibarguen, president and CEO of the John S. and James L. Knight Foundation, and Sharon Percy Rockefeller, president and CEO of the public television station WETA.

To defenders of corporate interests, the momentum around sugar, including the latest discussions around its addictive qualities, is simply a matter of professional advocacy groups “desperate to foment new regulations and lawsuits.” Such defenders must have cheered when Mississippi legislators went in the other direction and passed an “anti-Bloomberg” law that would prohibit localities from “restricting portion sizes, requiring nutritional information on meals, [or] banning toys in meals aimed at children.” Mississippi is the most obese state in the U.S.

The Takeaway: Have You Checked Your Gift Policy Lately?

Coca-Cola’s support of the NAACP may have less to do with an attempt to amass opposition to huge drink bans and more to do with Coca-Cola’s history on issues related to race. In 2000, the company paid $156 million to settle a class action racial discrimination lawsuit filed by Coke employees. At that time, it was the largest settlement ever in a racial discrimination case. With added costs for changes in Coke’s management practices and oversight, the total tab was $192.5 million. PepsiCo has also settled racial discrimination charges, though not on the scale of the Coca-Cola settlement.

Some see corporate philanthropic support for groups such as the NAACP and others as a way of corporations making amends for the unfortunately long histories of racial discrimination.  Strategic corporate philanthropy has a bottom line orientation, making grants for racial and ethnic groups such as the NAACP a matter of corporate marketing and outreach. Everyone knows that corporations don’t suddenly forget about their bottom lines when they make these grants, sponsor programs, and buy tables for civil rights groups. Groups like the NAACP and others can accept these grants if the corporations are truly undoing past racially discriminatory practices and if they aren’t being asked to sign on to positions supporting the corporations for activities and issues unrelated to their nonprofit mission and purpose.

Corporate grants shouldn’t be—and, in this case, we believe, aren’t—enough to get a national organization like the NAACP to take a position like this stance against New York City’s sugar ban. While we don’t doubt that support from Coke and Pepsi would make the civil rights organization open to hearing the beverage makers’ argument, we find it unlikely that that support would be sufficient to buy the hearts and minds of Ben Jealous and the national NAACP. That said, there is no strong reason that NAACP should not work with Mayor Bloomberg to make this law function better and more equitably.

If the NAACP clings to the argument that small businesses will be hurt by their inability to sell unrestricted amounts of addictive sugary drinks, or the argument that unless the law deals with all aspects of the sugar/obesity issue, it shouldn’t be passed, then the issue is lost. Instead, the NAACP and others should think of the ban on extremely large sugary drinks as comparable to the incremental regulatory steps taken against tobacco. The NAACP should be at the table to make this law more workable, and then it should start working on the next law and the next until sugar gets the kind of controls it really deserves in the name of public health.

More broadly, what is the lesson for other nonprofits to draw from the controversy over the sugary drink ban? For nonprofits, the issue is the influence of their grant sources. How can nonprofits fend off the kind of critiques lodged in the Huffington Post and the New York Times?  Our belief is that, when dealing with corporate grantmakers, nonprofits must remember the importance of gift (or grant) acceptance policies. A gift acceptance policy addresses three questions for nonprofits soliciting money from corporate groups:

  • What kinds of corporations will a nonprofit solicit for funding, and what kinds will it avoid or reject?
  • What conditions or restrictions imposed by the grantmaker will the nonprofit accept?
  • How will the nonprofit evaluate corporate grantmakers as potential funders?

Corporations don’t always engage in strategic philanthropy just because they’re entirely motivated by being good citizens. They’re always concerned about their profitability, visibility, acceptance, and marketing. When dealing with corporate funders, the challenge for a big national nonprofit like the NAACP, and for nonprofits of every stripe, is to be sure not to seek or accept corporate money that could compromise one’s mission or credibility. No one should be so naïve as to think that corporate money doesn’t come with strings attached. As such, nonprofits need to be smart about only accepting corporate grants that fit their agenda and that allow flexibility in how they will be put to use.

In regards to the NAACP’s opposition to banning large sugary drinks, the organization should be prepared to reveal its corporate gift acceptance policy and to talk about the principles it uses when it takes money from Coke or Pepsi. It should also be prepared to explain how it will pursue the necessary incremental strategies of working with Mayor Bloomberg to improve his flawed policy in order to save the lives of people in the black community in New York City and beyond.